This is just nostalgia talk
I played DF after MW.
Daggerfall can only dream of having content as "dull" as Morrowind. Also smaller dungeons of Morrowind is an improvement from the Daggerfall dungeons which are WAYYYYYYYYY too big for its own good.
I don't agree; a lot of content in DF and MW is largely comparable. Take quests for example - both games' quests are very linear, typically just a case of walking to a dungeon and killing something/picking something up and then walking back, or even just talking to an NPC in town, only MW gives them to you in the same order with the same details every time, and removes or greatly dumbs down other extenuating factors (travel time, legal status, having to ask around in town which involves your reputation and languages skills, etc). MW isn't a step up; it's the same thing but with half the mechanics missing.
Regarding the dungeons, DF's dungeons may be too large but they also make good use of character build, to the point where you can become trapped if you try to do something outside your skill set (eg leap down a chasm that you don't have the skill to climb, levitate, or teleport back out of). They tend to repeat far too soon and you end up in the same blocks over and over, which is a problem. Meanwhile, MW's dungeons are the same as Oblivion's and Skyrim's, in that they're focused almost entirely on combat and typically so brief and small in scale that they start to become very tedious very quickly because when you've seen one belonging to a certain set - Ancestral Tomb, Cave, Dwemer Ruin - you've more or less seen everything that set has to offer, and the others are all regurgitations of the same idea and same assets and often the same enemies. Again, MW ends up in a situation where it replicates some of the problems of DF (samey dungeons), but in a way that ends up being less interesting and less complex (because they're now too small to get lost in and too straightforward to make interesting use of your character build, especially since half the exploration skills like languages and climbing have been removed).
You suggested that Morrowind demonstrated good use of a handcrafted world; I don't think it did because I think most of its content is hastily made, relatively simplistic, and poor in quality, a feat Bethesda would replicate several more times over the subsequent 21 years. I do think that great handcrafted dungeons obviously beat procgen'd ones, but you were asking why people want the TES series specifically to take more cues from Daggerfall, and that's part of the answer - many people don't view MW, Oblivion and Skyrim as particularly great examples of handcrafted content, so it's not like TES made a quantum leap forward when it moved in that direction. It lost a lot, didn't really gain much, continued to replicate some of the weaknesses of DF but without the strengths, and ultimately led to three games which are all in a constant state of being simultaneously fun for what they are but also really disappointing, none of them seizing on the chance to make full use of their open-world nature
or the potential for high quality handmade content.
It is for this reason that I somehow doubt a modern day Daggerfall will be well received by the modern day audience.
This isn't really in doubt; if you offer people an RPG where they can't do everything they want in a single run and where they're punished for attempting things their character doesn't have the skills to do, they get annoyed. Obviously it's not going to enjoy blockbuster success, but I doubt they're imagining that it will.